Tesla Motors Inc. (NASDAQ:TSLA) is dreaded to be a disruptor of the entire auto industry, but it also has a tremendous cost advantage over its customary adversaries. According to the London-based International Strategy and Investment (ISI), the cars that Tesla (NASDAQ:TSLA) manufactures are eco-friendly and do not emit carbon dioxide (CO2) , so it doesn’t have to make enormous investments in rigid frameworks to meet strict fuel regulations which have been permitted by governments in Europe, China and the U.S.

 

The average fuel consumption demanded in Europe is proportionate to 57.4 miles per U.S. gallon by 2021 and in the U.S. it is equivalent to 54.5 mpg by 2025. ISI dispatched a report in which it explains how customary auto makers would have to pay a colossal fine because of these costs which would roughly reach $1,500 per vehicle.

 

ISI said it figures Tesla’s (NASDAQ:TSLA) stock cost could reach $320 in the future; on Monday it closed at just under $255. A year back Tesla (NASDAQ:TSLA) shares exchanged at around $170, and climbed to $290 when steps were taken to build a battery production factory in Reno, Nevada.

 

ISI believes that the sales target of 500,000 is quite possible for Tesla (NASDAQ:TSLA) even though the sale of electric vehicles have dropped recently. The Lux Research Firm estimated that this giga-industrial facility would result in more than 50 percent overcapacity of lithium-ion batteries, which in turn would lessen the expense to $2,800 for every vehicle; despite all this Tesla (NASDAQ:TSLA) still would not meet its target of 500,000 electric cars by 2020. Tesla (NASDAQ:TSLA) sales would reach 240,000 by 2020 resulting in thin margins to battery partner Panasonic and 57 percent overcapacity is not good news.

 

Cosmin Laslau, Lux Research analyst said that the Gigafactory would only be lessening the Tesla (NASDAQ:TSLA) model 3’s cost by $2,800, which is insufficient to be influential to the achievement of expected Lower-cost EV. The gigafactory is said to start production by 2017 and Tesla (NASDAQ:TSLA) and Panasonic (TYO:6752) will subsidize 45 percent and 35 percent of the initial $4 billion respectively. Tesla (NASDAQ:TSLA) is manufacturing the Model S sedan and will shortly introduce the model X SUV after that; it plans on reaching the mark of selling 100,000 cars by 2015.

After model x Tesla (NASDAQ:TSLA) plans to launch the Gen 3 to a wider market. Laslau further said that the batteries need to be cheaper if electric cars are going sell at all. Tesla’s (NASDAQ:TSLA) offers the lowest battery costs at the moment costing $274 per kWh and Tesla (NASDAQ:TSLA) CEO Elon Musk plans to reduce battery costs to $196 kWh by 30 percent with this new factory.

 

Morgan Stanley put forth its perspective regarding Tesla (NASDAQ:TSLA) that it should not get ahead of itself because other manufactures are investing in hydrogen currently so governments can be persuaded to lessen the burdensome regulations placed on them regarding fuel consumption.

 

ISI doesn’t share these views however as they believe that BEVs are the answer to emission free cars. On close examination BEVs outweighs fuel cells. They are extremely optimistic of Tesla (NASDAQ:TSLA)’s future in China.

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